Australian Dollar (AUD) Slides on Dovish RBA Minutes
The Australian Dollar (AUD) spiralled lower on Tuesday, following the news that the Reserve Bank of Australia’s (RBA) recent rate decision was ‘finely balanced’ between a hike and a pause.
This prompted AUD investors to sharply pare back bets on further rate rises, which sent the ‘Aussie’ tumbling against its peers.
Owing to a lack of macroeconomic data today, the ‘Aussie’ may be left licking its wounds. AUD could also be vulnerable to shifts in risk appetite.
New Zealand Dollar (NZD) Falls despite Consumer Confidence Recovery
An increase in consumer confidence in the fourth quarter failed to inspire the New Zealand Dollar (NZD) yesterday, as the currency’s close links to AUD pulled it lower.
Furthermore, a bearish market mood exerted pressure on the risk-sensitive ‘Kiwi’.
Risk appetite could drive the ‘Kiwi’ during today’s session, as the data calendar continues to be relatively sparse.
Pound (GBP) Cushioned by Persistent Rate Rise Bets
The risk-off tone weighed on the Pound (GBP) during yesterday’s session, preventing GBP from attracting significant support.
Bets on further interest rate hikes from the Bank of England (BoE) likely cushioned Sterling from significant losses, however. Markets have begun to price in a terminal rate of up to 6% by February 2024.
This afternoon, the latest UK inflation data is due to print. A hold in core inflation could elevate GBP rate hike bets, boosting Sterling.
Euro (EUR) Supported by July Hike Bets
Continued rate hike bets strengthened the Euro (EUR) on Tuesday, alongside a cautious market mood.
However, these gains may have been capped, as signs of a divide began to surface amongst European Central Bank (ECB) policymakers, with dovish perspectives gaining volume.
The Eurozone is set to see little in the way of data releases today. However, a speech in the evening from ECB policymaker Isabel Schnabel could boost EUR, as she is known to be hawkish.
US Dollar (USD) Rallies amid Bearish Trade
The US Dollar (USD) enjoyed safe-haven flows during Tuesday’s session, as the souring mood buoyed sentiment towards the ‘Greenback’.
Furthermore, optimism over decreased Sino-American tensions could have further lifted USD. US Secretary of State Antony Blinken and Chinese President Xi Jinping agreed to stabilise the frosty relations.
Later tonight, Federal Reserve Chair Jerome Powell is due to begin his testimony to the US Senate, wherein he will explain the Fed’s monetary policy approach. If he hints at further hikes, USD could climb.
Canadian Dollar (CAD) Muted as Oil Prices Slip
The Canadian Dollar (CAD) saw muted trade yesterday, as falling oil prices negated support brought by CAD’s close correlation to USD.
This evening, the ‘Loonie’ could see strength if retail sales improved on a monthly basis in April, as forecast.
Data Releases
Jun 21st 16:00 GBP Inflation Rate (May) 8.4%
Jun 21st 22:30 CAD Retail Sales (Apr) 0.2%
Jun 21st 23:45 EUR ECB Schnabel Speech
Jun 22nd 00:00 USD Fed Chair Powell Testimony